Minimum reserve requirement

At its meeting today, the CNB Bank Board decided, within the medium-term programme to lower the minimum reserve requirement (MRR) for banks and to harmonise them with the arrangement in the European Monetary Union, to cut the basic MRR from 5% to 2% and the preferential MRR (for building societies and Českomoravská záruční a rozvojová banka) from 4% to 2%, effective 7 October 1999. This measure will align the MRR level with that applied in the EMU countries. Harmonisation of other MRR parameters will follow. The lowering of the MRR will reduce commercial banks' costs and boost their competitiveness. However, at the same time, it will lead to a worsening of the CNB's economic performance.

CNB, M. Svehla